Mahindra keen on FIs retaining Gesco stake

MUMBAI, DEC 6: The Mahindras, the white knight in the Gesco Corp takeover battle, are hoping that the Indian financial institutions will c...

MUMBAI, DEC 6: The Mahindras, the white knight in the Gesco Corp takeover battle, are hoping that the Indian financial institutions will continue to remain as an investor in the real estate firm which is facing a takeover threat from Delhi-based corporate raider Abhishek Dalmia. “We would like the FIs to remain as investor in the company even after our offer expires,” Anand Mahindra, Managing Director of Mahindra and Mahindra (M&M) said here today.

FIs have already turned down the Mahindras’ offer price of Rs 44 per share and are asking for a Rs 52-54 band per share from either parties to sell off their stake.

“Though I cannot talk on behalf of the FIs… we would like Indian FIs to have faith in our management. The coming together of Mahindras’ real estate subsidiary and Gesco Corp is a good example of consolidation in the industry which will prove to be a long term and sound investment for the FIs. However,even if they do want to exit, they still have our offer in the table which is at Rs 44 per share,” he said. FIs have a 15 per cent stake in Gesco Corp. Of this, LIC holds a 4.5 per cent stake in the company, UTI holds 1.3 per cent while GIC has a 6.8 per cent stake.

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The Mahindras have bought 7 per cent stake from the International Finance Corporation (IFC) at Rs 44 per share and a similar offer is now open for the all the shareholders of Gesco Corp.

“We are looking at more opportunities of consolidation in the real estate sector,” he added. When asked whether they have opened talks with the Tatas to takeover their real estate business, Mahindra said they are looking at all the opportunities in the real estate industry.

As of now, the Dalmias hold around 11 per cent stake in the company while the Sheths hold an equivalent stake. After the open offer launched by the Dalmias, the Mahindras through its loss-making subsidiary, Mahindra Realty joined hands with the Sheths getting a higher stakeholding in the company in the bargain.

“We took HDFC’s help in getting a line of credit (to fund Gesco Corp takeover) as they have expertise in the real estate industry and it makes more economic sense to invest through borrowings instead of equity infusion,” Mahindra added. Investment banker Kotak Mahindra, in which the Mahindras have invested heavily, has brought all the players together.

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Financial institutions are not in a hurry to withdraw from GESCO which, they think, is a sound company, and without a suitable offer price would not hesitate to continue holding their stakes and remain in the company.

The ball, now is in the Dalmia’s court, who will have to either offer a better price than Mahindra’s at about Rs 54 to win over the FIs or bow out of the race.

M&M not interested in Maruti
MUMBAI: Auto major Mahindra and Mahindra (M&M) has said that it is not interested in picking up a stake in Maruti Udyog. The government is planning to disinvest its 50 per cent stake holding in the auto major.

“As of today, we are not interested… but time changes,” Anand Mahindra, MD of M&M said. Instead, the company will concentrate on its Project Scorpio in which the company is investing Rs 600 crore. "All our financial and management efforts is in launching the Scoprio by mid-2001 but we are always looking at consolidation opportunities," Mahindra added.